High-rise in the air pollution levels due to combustion of the fossil fuel gives us the opportunity to discover environmentally friendly and clean fuels for the engines. Biodiesel originated from cashew nut shell oil through transesterification process can be blended or used as a neat fuel in unmodified engines. This work investigates the effect of alumina nanoparticles on emission and performance characteristics of cashew nut shell biodiesel. Neat cashew nut shell biodiesel prepared by conventional transesterification is termed as BD100 and biodiesel prepared by modified transesterification with the addition of alumina nanoparticles is termed as BD100A. Experimental results on unmodified diesel engine revealed that emission parameters such as CO, HC, NOx, and smoke were decreased by 5.3%, 7.4%, 10.23%, and 16.1% for BD100% and 8.8%, 10.1%, 12.4%, and 18.4% for B100A, respectively, compared to diesel fuel. At full load conditions, compared to diesel fuel, the BTE dropped by 1.1% and 2.3%, whereas the BSFC increased by 3.8% and 5.1% for B100A and B100 correspondingly.